The New York Times lays out a bit of the problem not withstanding a fact check or two - see bottom - but nothing major misrepresented.
The Downside of the Boom
North Dakota took on the oversight of a multibillion-dollar oil industry
with a regulatory system built on trust, warnings and second chances.
WILLISTON, N.D. — In early August 2013,
Arlene Skurupey of Blacksburg, Va., got an animated call from the
normally taciturn farmer who rents her family land in Billings County,
N.D. There had been an accident at the Skurupey 1-9H oil well. “Oh, my
gosh, the gold is blowing,” she said he told her. “Bakken gold.”
It was the 11th blowout
since 2006 at a North Dakota well operated by Continental Resources, the
most prolific producer in the booming Bakken oil patch. Spewing some
173,250 gallons of potential pollutants, the eruption, undisclosed at
the time, was serious enough to bring the Oklahoma-based company’s
chairman and chief executive, Harold G. Hamm, to the remote scene.
It was not the first or
most catastrophic blowout visited by Mr. Hamm, a sharecropper’s son who
became the wealthiest oilman in America and energy adviser to Mitt
Romney during the 2012 presidential campaign. Two years earlier, a
towering derrick in Golden Valley County had erupted into flames and
toppled, leaving three workers badly burned. “I was a human torch,” said
the driller, Andrew J. Rohr.
Blowouts represent the
riskiest failure in the oil business. Yet, despite these serious
injuries and some 115,000 gallons spilled in those first 10 blowouts,
the North Dakota Industrial Commission, which regulates the drilling and
production of oil and gas, did not penalize Continental until the 11th.
The commission — the governor, attorney
general and agriculture commissioner — imposed a $75,000 penalty.
Earlier this year, though, the commission, as it often does, suspended
90 percent of the fine, settling for $7,500 after Continental blamed “an
irresponsible supervisor” — just as it had blamed Mr. Rohr and his
crew, contract workers, for the blowout that left them traumatized.
Since 2006, when advances
in hydraulic fracturing — fracking — and horizontal drilling began
unlocking a trove of sweet crude oil in the Bakken shale formation,
North Dakota has shed its identity as an agricultural state in decline
to become an oil powerhouse second only to Texas. A small state that
believes in small government, it took on the oversight of a
multibillion-dollar industry with a slender regulatory system built on
neighborly trust, verbal warnings and second chances.
In recent years, as the
boom really exploded, the number of reported spills, leaks, fires and
blowouts has soared, with an increase in spillage that outpaces the
increase in oil production, an investigation by The New York Times
found. Yet, even as the state has hired more oil field inspectors and
imposed new regulations, forgiveness remains embedded in the Industrial
Commission’s approach to an industry that has given North Dakota the
fastest-growing economy and lowest jobless rate in the country.
For those who champion
fossil fuels as the key to America’s energy independence, North Dakota
is an unrivaled success, a place where fracking has provoked little of
the divisive environmental debate that takes place elsewhere. Its state
leaders rarely mention the underside of the boom and do not release even
summary statistics about environmental incidents and enforcement
measures.
Over the past nine months,
using previously undisclosed and unanalyzed records, bolstered by scores
of interviews in North Dakota, The Times has pieced together a detailed
accounting of the industry’s environmental record and the state’s
approach to managing the “carbon rush.”
The Times found that the
Industrial Commission wields its power to penalize the industry only as a
last resort. It rarely pursues formal complaints and typically settles
those for about 10 percent of the assessed penalties. Since 2006, the
commission has collected an estimated $1.1 million in fines. This is a
pittance compared with the $33 million (including some reimbursements
for cleanups) collected by Texas’ equivalent authority over roughly the
same period, when Texas produced four times the oil.
“We’re spoiling the child
by sparing the rod,” said Daryl Peterson, a farmer who has filed a
complaint seeking to compel the state to punish oil companies for spills
that contaminated his land. “We should be using the sword, not the
feather.”
North Dakota’s oil and gas
regulatory setup is highly unusual in that it puts three top elected
officials directly in charge of an industry that, through its executives
and political action committees, can and does contribute to the
officials’ campaigns. Mr. Hamm and other Continental officials, for
instance, have contributed $39,900 to the commissioners since 2010. John
B. Hess, chief executive of Hess Oil, the state’s second-biggest oil
producer, contributed $25,000 to Gov. Jack Dalrymple in 2012.
State regulators say they
deliberately choose a collaborative rather than punitive approach
because they view the large independent companies that dominate the
Bakken as responsible and as their necessary allies in policing the oil
fields. They prefer to work alongside industry to develop new guidelines
or regulations when problems like overflowing waste, radioactive waste,
leaking pipelines, and flaring gas become too glaring to ignore.
Mr. Dalrymple’s office said in a
statement: “The North Dakota Industrial Commission has adopted some of
the most stringent oil and gas production regulations in the country to
enhance protections for our water, air and land. At the same time, the
state has significantly increased staffing to enforce environmental
protections. Our track record is one of increased regulation and
oversight.”
Researchers who study
government enforcement generally conclude that “the cooperative approach
doesn’t seem to generate results” while “the evidence shows that
increased monitoring and increased enforcement will reduce the incidence
of oil spills,” said Mark A. Cohen, a Vanderbilt University professor
who led a team advising the National Commission on the BP Deepwater
Horizon Oil Spill and Offshore Drilling.
With spills steadily
rising in North Dakota, evidence gathered by The Times suggests that the
cooperative approach is not working that well for the state, where the
Industrial Commission shares industry oversight with the state’s Health
Department and federal agencies.
One environmental incident for every 11 wells in 2006, for instance, became one for every six last year, The Times found.
Through early October of this year, companies reported 3.8 million gallons spilled, nearly as much as in 2011 and 2012 combined.
Over all, more than 18.4
million gallons of oils and chemicals spilled, leaked or misted into the
air, soil and waters of North Dakota from 2006 through early October
2014. (In addition, the oil industry reported spilling 5.2 million
gallons of nontoxic substances, mostly fresh water, which can alter the
environment and carry contaminants.)
The spill numbers derive
from estimates, and sometimes serious underestimates, reported to the
state by the industry. State officials, who rarely discuss them
publicly, sometimes use them to present a rosier image. Over the summer,
speaking to farmers in the town of Antler, Lynn D. Helms, the director
of the Department of Mineral Resources, announced “a little bit of good
news”: The spill rate per well was “steady or down.” In fact, the rate
has risen sharply since the early days of the boom.
Presented with The Times’s
data analysis, and asked if the state was doing an effective job at
preventing spills, Mr. Helms struck a more sober note. “We’re doing
O.K.,” he said. “We’re not doing great.”
He noted it is a federal
agency, the Pipeline and Hazardous Materials Safety Administration, that
regulates oil transmission pipelines. “You can’t use the spills
P.H.M.S.A. was responsible for and conclude my approach to regulation is
not working,” he said.
Indeed, as the tangle of
buried pipelines has grown, there have been no federal pipeline
inspectors based in North Dakota. But there have been no state
inspectors, either, to oversee the much larger network of gathering
pipelines unregulated by the federal government — a fount of many
spills.
Penalizing companies for
every violation is imprudent and can be counterproductive, Mr. Helms
said, potentially “leaving the citizens of North Dakota with enormous
liabilities on their hands when bankrupt operators walk away.”
Continental Resources
hardly seems likely to walk away from its 1.2 million leased acres in
the Bakken. It has reaped substantial profit from the boom, with $2.8
billion in net income from 2006 through 2013.
But the company, which has
a former North Dakota governor on its board, has been treated with
leniency by the Industrial Commission.
From 2006 through August,
it reported more spills and environmental incidents (937) and a greater
volume of spillage (1.6 million gallons) than any other operator. It
spilled more per barrel of oil produced than any of the state’s other
major producers. Since 2006, however, the company has paid the
Industrial Commission $20,000 out of $222,000 in assessed fines.
Continental said in a
written response to questions that it was misleading to compare its
spill record with that of other operators because “we are not aware
other operators report spills as transparently and proactively as we
do.” It said that it had recovered the majority of what it spilled, and
that penalty reductions came from providing the Industrial Commission
“with precisely the information it needs to enforce its regulations
fairly.”
What Continental paid Mr.
Rohr, the injured driller, is guarded by a confidentiality agreement
negotiated after a jury was impaneled for a trial this September. His
wife, Winnie, said she wished the trial had gone forward “so the truth
could come out, but we just didn’t have enough power to fight them.”
Looking back now, one thing gnaws at her.
“You know what really
bothered me?” Mrs. Rohr said. “Harold Hamm flew up to see the damage to
the rig but didn’t go see the guys who were burned.”
Given the state’s history
of population loss and economic decline, state officials delighted in
the arrival of oil companies eager to exploit the tremendous untapped
potential of the primeval Bakken formation deep beneath the sweeping
prairies and rugged badlands of western North Dakota.
Especially during the
first years, officials were anxious that this oil boom, like previous
ones, could be fleeting, that oil companies, if not embraced, could
shift their rigs and capital investment to fields with less severe
winters and better access to markets.
“There was a mentality
that we should be helping things along, not getting in the way with
regulations,” said Todd Sattler, a lawyer who served as a state oil and
gas hearing officer through mid-2011. “It wasn’t blatant disregard for
bad things, just permissive.”
Mr. Sattler said he tried
to establish a protocol for field investigations, preparing a three-page
checklist of procedures, including how to conduct witness interviews.
The response from the state’s chief inspector, he said, was: “I’m not
going to be a cop out there, Todd.”
In 2006, the Industrial Commission
issued 419 drilling permits, processing applications in five days. By
2011, when it handed out 1,927 permits, it was still managing to issue
them in 10 days. At that point, concerned that the Environmental
Protection Agency might establish a moratorium on fracking — the
legislature set aside $1 million to sue the E.P.A. — there was a desire
to establish facts on the ground.
Some officials in western
North Dakota challenged the accelerating pace. “It was so ragtag and
breathless,” said Dan Kalil, the Williams County Commission chairman.
“Infrastructure in every facet wasn’t able to keep up.”
Ron Ness, president of the
North Dakota Petroleum Council, said: “It’s easy to say it’s been too
fast, too much. But this is what North Dakotans have hoped for, prayed
for.” Investors from all over the country are now drawn to tiny, remote
places like Watford City, where “there wasn’t a damn thing” seven years
ago, he said.
“We’ve got the
largest-producing Cinnabon anywhere in the world,” he said. (The
Williston Cinnabon, more precisely, has the highest sales in a travel
plaza, the company said.)
In the first five years,
the “slow, nasty drip, drip, drip” of routine spills — as Edmund Baker,
environmental director for the Fort Berthold Reservation in the heart of
the oil patch, calls it — went largely unnoticed and sometimes
unreported to the authorities.
In the spring thaw of
2011, however, after a winter of record snowfall, scores of oil waste
pits overflowed at once. The large, open pits, adjacent to rigs
throughout the Bakken at that point, disgorged oil-based drilling mud
that mixed with snowmelt and streamed across farmland and into stock
ponds, creeks and river tributaries.
Farmers were horrified;
the local news media took note. And, in concert with the development of a
new regulation outlawing liquid waste pits, the Industrial Commission
undertook its first — and so far only — crackdown on spills. It filed
several dozen formal complaints against companies that, Mr. Helms said,
had defied the Mineral Resources Department’s warning to take
precautions to prevent the predicted overflows.
Hess Oil was one target. It paid its fines in full: $112,500.
Continental, like some other companies, disputed its responsibility.
Its lawyer, a former
counsel to the Industrial Commission, proposed that consent agreements
state that the overflows were caused by unforeseeable extreme weather.
Instead, the agreements attributed the violations “in part” to bad
weather “unforeseen by Continental.”
Still, the Industrial Commission accepted $12,500 rather than $125,000.
That fall, at a commission meeting in Bismarck, Mr. Helms explained the logic behind the waste pit settlements.
Most companies would make
“a voluntary 10 percent payment” and 90 percent would be suspended for a
year, during which the operator would have to “keep completely clean”
of the offense, Mr. Helms said, according to the meeting minutes. This
works, he added, because “keeping that 90 percent hanging over their
head for a year creates a culture change within the company.”
Mr. Helms said this had
been departmental practice since the early 2000s when officials were
trying to prod Earl Schwartz of GoFor Oil — his logo was a gopher in a
hard hat — to plug some wells and start production on others.
Sarah Vogel, a former
Industrial Commission member, said she considered it a startling
admission that current policy was based on “the treatment of a small
wildcatter from an earlier era.”
“It’s absurd to compare an
Earl Schwartz to a Hess or any of these other enormous companies worth
billions,” she said. “To me, announcing publicly that it is your
practice to suspend the bulk of all fines makes a mockery of the whole
enforcement system. Should we tell the general public that if they’re
caught speeding, the fine is $100, but they only have to pay $10? It’s
an invitation to violate the law.”
Bearded and deliberative,
Mr. Helms is a petroleum engineer by trade, with a hand that bears the
burn scars of an industrial accident. The state’s senior oil official
since 2005, he previously worked at Texaco for two years and at Hess for
18.
To his critics, Mr. Helms
personifies a cozy relationship between the commission and oil
companies. His dual mission heightens this, they say, as he is compelled
by statute both to promote “the greatest possible economic recovery of
oil and gas” and to enforce regulations.
Mr. Helms, however, said
that his background gives him access and authority, and that his job is
to promote responsible development, not the industry.
“In order to effectively
do that I have to be on a first-name basis with C.E.O.s and managers,”
he said. “If they didn’t trust me, and if they expected every time they
made a mistake they were going to get slapped with a great big fine or
be singled out or profiled, I wouldn’t get straight answers.”
The commission has imposed
its stiffest penalties on smaller companies. Last year, it fined Halek
Operating, whose leader had a history of swindling investors in Texas, a
record $1.5 million for a defective waste disposal well that threatened
a town’s water supply. But Halek has gone out of business, and the
state is unlikely to obtain more than the $140,000 in bonds it has
seized.
Mr. Helms said that
problems in the oil patch were often the fault not of the major
companies but of the contractors who do their physical labor.
“The large independents —
the bread and butter of the North Dakota oil industry — really
understand their social license to operate and really try to emphasize
environment, health and safety,” he said. “But there’s a disconnect.”
L. David Glatt, Mr.
Helms’s counterpart in the Health Department’s environmental division,
has voiced the same sentiment. Though the state’s chief environmental
regulator, he described himself on a radio show last year as “not a
regulations guy” — after the host said that “the word ‘regulation’ is
like Lucifer” in North Dakota.
Before the boom, Mr. Glatt
said in an interview, the Health Department had “a very hands-on,
personalized approach, going out and helping people solve their
problems.”
“Now with the oil boom bringing in
people who are just here to make a living or make money,” he said, “we
are being forced to change our regulatory approach to in some cases a
very heavy-handed one, which is a paradigm shift for us.”
Judging by the data, the
Health Department, overseen by civil servants and not elected officials,
appears to have been tougher on the oil industry than the Industrial
Commission has. It has collected over three-quarters of the fines
levied, amounting to at least $4.1 million since 2006.
Still, most of that
revenue derived from a single industrywide enforcement action that, Mr.
Glatt said, the industry itself requested.
After years of
underestimating volatile emissions from its oil storage tanks in the
Bakken and allowing them to vent directly into the air, the industry
“self-reported” the potential pollution and safety problem to the
government.
A task force was formed;
the companies devised a new model for estimating the emissions and
pledged to control them through devices. And then they made a request:
“They wanted fines to be collected by the state to reduce their exposure
to lawsuits,” Mr. Glatt said. “We said, ‘Sure, we’d be more than happy
to take your money.’ ”
The Health Department did
not publicize that it collected record penalties for these violations
last year: $2.64 million, including unprecedented sums like $418,500
from Hess and $305,400 from Continental.
“We are not wired like
that,” Mr. Glatt said. “It goes to the fact that, honestly, when I get
to the point where I have to collect a penalty, I look at that as a
failure on our part.”
At her isolated farmhouse
near Tioga, Patricia Jensen disarms guests — pipeline executives, oil
spill cleaners — with a glistening berry pie fresh from the oven. She
and her husband, Steven, are firm but nonconfrontational in their
approach to what he calls the “ecological nightmare” in the backyard of
the family’s century-old homestead.
“We’ve kind of taken a route of not being too sour, but yet we’re really concerned,” Mr. Jensen said.
What happened to them last
fall — considered the largest on-land oil spill in recent American
history — confronted North Dakota with the potential costs of the boom.
It shined a light on the
state government’s lack of transparency when it went unreported to the
public for 11 days. It raised awareness that spills of all magnitudes
were daily and routine. It highlighted the inadequacy of pipeline
monitoring.
And it made clear that
even in the worst cases the authorities are hesitant to use punitive
sanctions. More than a year after the spill, neither the federal nor the
state government has penalized the company responsible, Tesoro
Logistics of San Antonio.
“Clearly, they have
impacted the groundwater system,” Mr. Glatt said. “There will be an
enforcement action. But we use a carrot and stick approach. The carrot
is if you get into it and clean it quickly, the stick won’t be as
severe.”
Late last September, Mr.
Jensen was harvesting waist-high durum wheat when he found his combine’s
tires wet with an unmistakable sheen. His wife called the operator of a
nearby well, which contacted Tesoro, and both companies immediately
sent out representatives.
“It was dark out at this
point,” Mrs. Jensen said. “We went to drive wide around what we thought
was the spill and realized that we were not at the edge of it. We were
still in it.”
Mr. Jensen continued:
“There was a question of, well, whose line is it? It was squirting out
of the ground. But the minute Tesoro shut its valve, there was a loud
sucking sound.”
In its initial report,
Tesoro seriously underestimated the contamination. A week and a half
later, after a “subsurface assessment” request by the state, it tripled
its estimate to 20,600 barrels, or 865,200 gallons. The lost oil had
soaked a large stretch — equal to about six football fields — of the
windswept land where the Jensens run cattle and rotate crops like
sunflowers and sunshine-yellow canola.
The spill was publicly
disclosed only after local reporters learned of it, provoking an outcry
from environmentalists that led to the creation of a spills website.
In Tioga, a preliminary
investigation found a small hole in the pipeline that appeared to have
been caused by lightning, said the federal pipeline administration,
whose final investigation has yet to be completed.
That cast the incident as an act of
nature, but Tesoro officials now acknowledge that the hole had gone
undetected for as long as two months.
“How do you lose over
20,000 barrels of oil and not realize it?” Mr. Glatt said. “That does
kind of boggle the mind a little bit.”
In a statement to The Times, Tesoro expressed “deep regret.”
“Our systems did not
prevent the spill, and we find that unacceptable,” it said. “We have put
additional systems and controls in place and are committed to operating
a safe pipeline system.”
Before the leak sprang in
July 2013, Tesoro had not conducted an internal inspection of that
segment of pipeline for eight years. Federal officials had last
inspected the Tesoro network in North Dakota in 2010.
Pipeline leaks are not the
most common cause of spills; valve or piping connection problems are,
The Times found. But they spew the greatest volume of oil and wastewater
and are the most likely to cause pollution.
Unlike several other major
oil-producing states, North Dakota has until now relied on federal
inspectors — based in Kansas City, Mo., 950 miles from Tioga — to
monitor all its oil transmission lines, interstate and intrastate.
At the time of the spill,
Brian Kalk, chairman of the state Public Service Commission, felt keenly
frustrated, he said: “The company was not as forthright as they should
have been. Everybody in the state was asking what’s going on, and I
didn’t have jurisdiction on this pipeline. I didn’t like it.”
As a result, Mr. Kalk’s
commission is seeking to take over the monitoring of the crude oil
transmission pipelines that travel solely within the state.
Transmission pipelines,
which carry oil to market, are not the only problem, however. Until this
year, no authority, federal or state, monitored what Mr. Helms
estimates to be 18,000 miles of gathering pipelines, which transport oil
and wastewater from wells to collection sites. In fact, the North
Dakota government does not even know their precise locations.
But, with legislative
permission, Mr. Helms is taking the gathering lines under his aegis and
hiring the state’s first three hazardous-liquid pipeline inspectors.
In Tioga, the Jensens are
inclined to look at the bright side, though 33 acres of their farmland
have been cordoned off for an industrial cleanup operation expected to
take at least another year. They are glad that their spill was oil, not
wastewater — “There’s no cleaning up of that,” Mr. Jensen said — and
hope it served as “an eye-opener.”
“The industry really wants
to fight putting monitoring devices on pipelines, but it’s a
no-brainer, seems like,” Mr. Jensen said. “The cost of monitoring
equipment is obviously far cheaper than the cost of cleanup.”
Tesoro said the cleanup
would cost more than an initial estimate of $4 million and “less than
$25 million.” It hired a Canadian company, Nelson Environmental
Remediation, to treat the contaminated soil by burning it on site in
“thermal desorption units.”
“We’re kind of like the
proctologists of the industry,” said Warren Nelson, the company’s vice
president. “We deal with the problems nobody wants to talk about.”
One August evening this
year, after a barbecue dinner beneath an elaborate skull-and-antler
chandelier in the Outlaw Shack at Antler Memorial Park, Mr. Helms and
Mr. Glatt faced an audience of farmers disgruntled by the wastewater
contamination of northwestern North Dakota.
Their corner of the state
is like a cautionary tale. It is pocked with the remnants of 1980s oil
production: abandoned wastewater ponds, some of which leached brine
downward and outward, sterilizing the soil and shriveling crops. State
officials have estimated it would cost $2 million each to reclaim what
might amount to 1,000 ponds, said State Representative Marvin E. Nelson.
“Well, we have more than
$2 billion in our Legacy Fund,” he said, referring to a set-aside fund
containing oil tax revenues. “So why not take the legacy from this oil
boom to fix the legacy from the last oil boom?”
Though the industry now
disposes of oil field brine primarily by injecting it deep underground,
it still needs to be transported to disposal wells and remains a
stubborn pollution problem. For every barrel of oil, about 1.4 barrels
of brine is produced, state officials say, and far more of it spills
than does oil.
And while the industry
calls it saltwater — “which makes it sound harmless, like something you
would gargle with,” said Derrick Braaten, a lawyer who represents
farmers — it is highly saline and can be laced with toxic metals and
radioactive substances.
Three years ago, a farmer
in the Antler audience experienced one of the largest oil field
wastewater spills ever in North Dakota. A leaking wastewater line
contaminated some 24 acres of farmland and eight surface ponds, and the
site has yet to be restored to health.
After the leak was
detected, cleanup crews pumped out two million gallons of severely
contaminated water, with chloride levels 2,700 times higher than normal,
and a generator was still pumping out contaminants this summer.
“Three years!” the
farmer, Darwin Peterson, exclaimed at the meeting. “Three years, and
this spill has been addressed in a Band-Aid fashion. Meanwhile, that 24
acres has expanded, with Mother Nature, to the neighbors. When is enough
enough?”
State officials say the
spill far exceeded the 12,600 gallons originally reported by the
company, Petro Harvester, though it remains listed that way on the
state’s spills website. Mr. Helms, in an email last year to his
spokeswoman, Alison Ritter, estimated it at 332,000 gallons. Mr. Nelson,
the legislator and agronomist, thinks it probably was three times that
much.
The state has not yet penalized Petro Harvester.
Underlying the state’s
regulatory posture is the premise that spills are all but inevitable and
will increase alongside increases in drilling. But that is not a
universally shared perspective.
“There’s this idea that
spills are just the cost of doing business,” said Amy Mall, a senior
policy analyst with the Natural Resources Defense Council. “But there’s
no technical justification for all these spills. And it’s not
acceptable. It’s just not. It just shows how poorly the oil and gas
industry is doing its job, and that nobody is making them do it right.”
To a skeptical audience
in Antler, Mr. Helms proclaimed that North Dakota was “head and
shoulders above our sister states” in the region for its vigilance as
measured by the ratio of wells to inspectors, the frequency of
inspections and the authority to fine up to $12,500 per offense a day.
He said that almost all
problems found by his inspectors were corrected within 30 days of verbal
warnings. Some 2,500 warnings were issued last year, Ms. Ritter said;
only 4 percent resulted in a written violation and only nine complaints
were filed (up from four in 2012).
In the park, Mr. Helms
offered a boardroom-style PowerPoint presentation, including a graphic
that he said contained the “good news” that the spill rate per well was
steady or down.
His figures, however,
provided to The Times later, show that the number of spills continued to
grow faster than the number of wells — just not as fast as before. All
told, the number of wells is up 200 percent and spills 650 percent since
2004.
The farmers in Antler
said they assumed Mr. Helms’s spills data was comprehensive, but he told
The Times later that he was including only spills under his
jurisdiction. That omitted hundreds of incidents, including the Jensens’
spill and the 464,000 gallons of oil that gushed from a fiery train
derailment near Casselton last December.
The most encouraging
statistic, Mr. Helms told the farmers, was that a higher proportion of
individual spills were being contained to production sites. That is true
according to the numbers he uses. But, looking at the actual volume of
pollutants and all reported spills, The Times found a decline, not an
improvement, in spill containment — with 45 percent contained from 2011
to 2013, down from 62 percent in the previous three years.
Without engaging in any
data analysis, the farmers in Antler were suspicious of the spill
estimates because they were based on self-reporting by the industry.
“You take the word of the operators? That’s your first mistake,” one man
said, to laughter. They remarked that their own spills were often
drastically underestimated on the state’s spills website.
Indeed, The Times found
scores of cases on that website where the release of pollutants was not
just undercounted but marked as zero. One supposedly zero-volume
wastewater spill in Bottineau County last year required the removal of
600 dump-truck loads of contaminated soil.
For a North Dakotan
trying to make sense of the state’s environmental and enforcement
records, numbers are essentially inaccessible. The state spills site
posts incidents in chronological order, without summary statistics, and
it is not searchable. Oil and gas enforcement data is not made public at
all, unlike in Texas, where the legislature mandates quarterly reports.
The Times built a
database to analyze the state’s raw information from a variety of
perspectives, including a company-by-company assessment. It found that
companies in the Bakken spill at different rates. This suggests to some
experts that companies could do more to prevent and minimize
environmental incidents.
“Whether it’s maintaining
equipment properly, monitoring equipment routinely, training
individuals well, having backup equipment on site or having containment
machinery — there are all kinds of things that can be done,” Professor
Cohen of Vanderbilt said. “But they all require money and attention.”
Statoil, a multinational company
whose largest shareholder is the Norwegian government, now ranks as the
state’s fifth-biggest producer. With a professed goal of “zero
incidents, zero releases,” according to Russell Rankin, its regional
manager, it has reported no blowouts and has the best record in the
state among the major producers in terms of how many gallons of oil it
produces for each incident.
Based on volume, Statoil
has produced 9,000 gallons of oil for every gallon of spillage;
Continental has produced 3,500. Statoil contained some 70 percent of its
spill volume to production sites. Continental contained less than half,
The Times found.
In its written response,
Continental disputed The Times’s “math,” but did not respond further
after it was sent a spreadsheet of reported incidents that formed the
basis for the findings.
Continental, which on its
website calls itself “America’s oil champion,” said it has “implemented
a corporate policy focused on reporting, spill reduction and,
ultimately, elimination.” It emphasized that it was the largest producer
in the Bakken and “managed the largest volume of liquids.” It
underscored that “our diligent spill response efforts have enabled us to
recover the majority of all volumes spilled.”
And, Continental said,
The Times should not imply that “volumes spilled remain in the
environment in perpetuity and that we and other operators have no
concern for doing anything more than reporting spills as ‘an inevitable
byproduct of oil production.’ ”
When the Skurupey well blew out last summer, Continental waited some 10 hours to notify the local authorities.
“They should have called
us a lot sooner, but when these things happen, the oil companies pretty
much take over, " said Sheriff Dave Jurgens of Billings County. “They
have their own security, and they don’t let anybody on location, unless
you’re with Continental or the state Industrial Commission. And I
totally understand why. It’s specialized-type stuff.”
The public never knew the
blowout had occurred because the well, like many new wells, had been
granted confidential status by the state for competitive reasons; almost
everything except its existence was off the record for six months.
Oil, water and chemicals
shot 40 feet into the air from the wellhead but did not ignite. One
worker was injured with a broken finger and bruises to his head and
chest, the sheriff said. “They didn’t call an ambulance, just put him in
a pickup and took him to the E.R.,” he said. “That was not very wise on
their part.”
The oil misted over hundreds of acres, contaminating hundreds of bales of hay and alfalfa fields.
“They redid the land,
washed all the tanks,” Mrs. Skurupey said. “Continental was super-nice.
They left no stones unturned, as far as I was concerned. They paid us
all for damages, and we signed agreements that we wouldn’t sue.”
Defending itself against
the commission’s enforcement action this year, Continental argued that
its own investigation revealed that “an irresponsible supervisor’s
callous disregard of” its “well-established standard operating
procedures” caused the Skurupey blowout.
At the Williston
courthouse in September, Continental’s lawyer, Steven J. Adams of Tulsa,
Okla., placed the responsibility for the previous blowout in Golden
Valley County squarely on Mr. Rohr and his crew, who worked for Cyclone
Drilling of Wyoming.
“It was the Cyclone crew that failed to do its job,” he told the jury.
Mr. Rohr’s lawyer, Justin
L. Williams of Corpus Christi, Tex., opened by suggesting that
Continental prized speed over safety: “Pedal to the metal, no brakes,
lives shattered.”
During
the voir dire process, many prospective jurors had revealed just how
interwoven their lives were not only with the oil industry, but also
with Continental. Some had worked for or done business with Continental;
others owned its stock or received royalty checks from Continental
wells.
Asked if they had strong
feelings about the oil boom, almost all, even those who saw the
positive, raised their hands to say they thought it had had negative
consequences, too. A landowner referred to oil sludge buried and flares
burning on her property, a nurse to injured oil workers treated at her
clinic, an oil field technician to a “hurry up and wait world” that put
profits first.
The next morning, a settlement was reached.
Later, in a nearby hotel,
sitting with his lawyers, his wife and a former co-worker, Mr. Rohr
lifted his T-shirt to reveal what he had been prepared to show the jury:
his pink, waffled back, patched together through skin grafts after the
rig at the Beaver Creek State 1-36H well exploded into flames on July
24, 2011.
“My memories of it are
bad,” he said. “I seen a big, bright, white light, and I didn’t think
I’d make it out. And then that big blast hit me. I was a big ball of
flame, running out of there, my safety glasses melting around my eyes. I
thought I was blind. Dying.”
Mr. Rohr, who is called A.J., stared into his coffee cup, crying.
Erick Hartse, 23, who had
been his assistant driller and escaped injury in the blowout, winced.
“I have a lot of guilt,” he said. “I sent A.J. down to check the inside
choke that day. It was per our blowout procedures, but I was the last
one to see this guy unhurt, unscathed.”
Mr. Rohr and two
colleagues were airlifted to a burn center in Minneapolis. With serious
burns over 60 percent of his body. Mr. Rohr spent a month hospitalized.
Still in constant pain and reliant on painkillers, he has not returned
to the oil fields, the only job he has ever known.
The two men and their
boss, Wally Dschaak, said they thought from the start that the well,
situated in a remote, serene spot about a mile from the Little Missouri
River, was going to give them trouble.
“From the day we moved onto that miserable, slimy, dirty location, things had been fighting us,” Mr. Hartse said.
Mr. Dschaak said, “That well was one step away from getting out of control at all times.”
Continental, which
declined to discuss the case, imported oil fire specialists from Texas
to extinguish the blaze. Later, Cyclone sent Mr. Hartse to Wyoming to
help build a replacement rig, he said, but did not allow him to
accompany it back to North Dakota. “Continental wanted no part of
anybody who was there that day,” Mr. Hartse said.
“I understood Cyclone’s position,” he added. “You can’t kill the goose that lays the golden egg.”
Deborah Sontag reported from Williston, and Robert
Gebeloff from New York. Michael Wines contributed reporting from
Bismarck, N.D.
Produced by Gregor Aisch, Hannah Fairfield, John Niedermeyer, Matt Ruby and Jeremy White
